When you have finally launched your enterprise, filling out documents may seem like a waste of time. Nonetheless, the normal functioning of a venture is impossible without internal and external paperwork. Thus, in the vast majority of states, once an LLC is established, you will need to file regular annual or biennial report. Besides that, in California and some other states, you will also be asked to submit initial reports shortly after setting up your firm.
In this article, we will take a quick look at the most significant points regarding LLC annual reporting.
What Is an LLC Annual Report?
An annual report stands for a short informational form that contains key details about the company and the results of its activities for the year. Among other things, you need to provide the official name, address of the principal office, registered agent data, and so forth. Moreover, all LLCs are required to submit such a document.
What is the purpose of it? An annual report is designed to ensure that the state always has the latest updates on an LLC.
The information given in the reports is publicly available, which provides not only protection of clients’ rights but also compliance with the firm’s interests. If the contacts stored in the state database are up-to-date, any person can reach the organization, and it will be informed about important events on time.
For instance, if you receive a notice of a lawsuit against an entity, you may participate in the process to protect your interests.
In some states, an annual report is called the Statements of Information. However, regardless of its name, this paper does not represent the usual financial statements that ventures prepare for the owners, investors, and others.
Basic Rules and Penalties
It is easy to forget that your annual reporting deadline is coming up in the hustle and bustle of daily life. Especially if you have multiple businesses located in different states. To keep your organization in good standing, mark the filing deadline on your calendar or use a reminder on your phone. This is a simple but effective way to be prepared for filing.
An alternative option might be using the professional registered agent’s services. Most such companies will not only take care of obtaining your official papers but will also assist you in submitting your report on time.
There is a state fee for processing the documentation. It depends on the state, so be sure to check this information in advance to consider the cost of the annual report when budgeting your firm.
As for deadlines, they are based on different factors. In recent years, the tendency has been to file reports on the anniversary of an LLC’s incorporation. If you don’t remember the date when the organization was opened, you can find this information in the formation papers or by searching the business database.
A few states take a different approach, setting a specific submission date uniform for all ventures. You can usually find it on the official website of the Secretary of State or other agencies overseeing your specific field. To make sure you don’t miss the deadline for annual reporting, in some states, you will also receive a reminder from the Secretary of State.
What happens if you don’t submit it on time? The consequences depend on the state. Some will give you time to correct the violation without legal implications. Nevertheless, if the venture continues to ignore this obligation, then it will face serious repercussions. First, the entity will be fined. It will also lose its good standing, which will adversely affect its operation. Enterprises granted non-compliant status cannot renew their licenses, apply for a loan, or obtain the Certificate of Good Standing needed to expand to another state. After a certain period, a non-compliant company may be subject to administrative dissolution. After that, it will be officially closed and will not be able to continue its operation.
Naturally, restoring the functioning of an enterprise that has been forcibly shut down by the state is possible. However, you are to remove the violation, which is the basis for such a decision, as well as pay all fines and mandatory fees. You will save more time, nerves, and money if you prepare and submit your company’s annual report on time and pay the required fee.
How to Write an Annual Report?
Before you proceed to submit it, you should carefully learn the state’s requirements. It only takes a few minutes but can save you time and money in the future. Below we have prepared 5 basic steps for you to follow to ensure a quick and easy process for filing your annual report.
- Check Your State Requirements
While most states obligate LLCs to send regular annual reports to the state, others do not. In addition, several of them require enterprises to provide the documentation only once every two years.
You can get more information about annual reporting on the official website of the Secretary of State or another public agency, which has registered your entity. Visit it to find out if LLCs are subject to submitting an annual report, how often, how much the mandatory fee is, etc.
Additionally, you may use the information regarding the annual reports online. Keep in mind that in some states, this document may be called differently. For example, in California, it is referred to as the Statement of Information.
- Set a Deadline
Every state has a unique approach to the frequency of filing a report. Most often, companies are required to submit it once a year. At the same time, some states mandate a report every 2 years or even every 10 years.
It is also crucial to adhere to deadlines. Typically, LLCs are obligated by law to file paperwork by the anniversary of the venture’s creation. In this case, you need to set a reminder beforehand since not all states send enterprises a notice when a deadline approaches. Another option is a statutory date uniform for all organizations, regardless of the date of incorporation.
Some states may require an initial report in addition to an annual one. Such a document should be submitted within the statutory deadline after the official launch of the firm.
- Complete the Form
In most cases, you can file your report both in paper and electronic form. The required application can be filled out and submitted on the Secretary of State’s website or printed out and mailed or faxed.
The procedure itself will take a few minutes to complete. However, you may need to prepare some commercial and personal information in advance. Here are the issues most states ask for:
- Legal name of the venture;
- Company’s address;
- Registered agent’s info;
- Names and addresses of the owners and managers;
- Purpose of the enterprise;
- Type of business, etc.
In some states, the annual report is also used as a method of gathering information for the franchise tax.
- Submit Your Annual Report to the State
The filing method depends on the state specifics. Generally, the owners have several options when it comes to delivering the completed application to the Secretary of State: by mail, in person, online, or by fax. Addresses are usually available on the state’s official website.
If you submit hard copy documents, you can pay the processing fee by check or money order. For online applications, a credit or debit card is used. The cost varies from state to state. Sometimes, you will also have to pay some taxes when filing your report in addition to the required fee. This cost can be as low as $50 or as high as $400.
- Add a Reminder
Missing the deadline and refusing to provide an annual report often results in severe penalties. The company may even face involuntary closure. To avoid this and to ensure the firm’s good reputation, mark the filing date on your calendar.